Palantir is reportedly planning to go public at a valuation of $41 billion as early as this year. But just 15 years ago, when the company had just launched, it almost went out of business several times.

Palantir CEO Alex Karp says that at the time, he didn't understand the world of Silicon Valley venture capitalists. He thought the best strategy was brutal honesty — including an objective assessment of what was wrong, and what could go wrong, with what Palantir was trying to do. He wishes now that he had a more confident sales pitch, he says.

"You're not supposed to go exactly explain what you're doing, what's wrong with it," Karp said in a podcast interview this week with Mathias Döpfner, the CEO of Business Insider parent company Axel Springer. "You're supposed to be a complete a--hole and that's how you get funding. We just thought this is going to be the biggest thing, it's going to change the world for the better."

When Karp pitched to Silicon Valley investors, they took a pass. Without the funding, Palantir was constantly running out of money, Karp said. So instead of spending their resources on creating a product, Palantir switched gears and tried to pivot into the data security business.

Still, investors didn't buy into that, either, Karp says — they thought Palantir was taking a detour because employees didn't think the product would actually work. He couldn't even go to investors outside of Silicon Valley, he says, because those investors would just wonder why he couldn't raise money closer to home.

"We could not for the life of us get any VC in Palo Alto to invest and there was also a huge problem because if you go to other investors but no one in Palo Alto will invest, how can this be at all real?" Karp said.

So then, Palantir invested its time and limited amounts of cash into a commercial product called Metropolis. The result? Failure again, Karp said. The team pulled the plug on Metropolis, and it wasn't until years later when Palantir was able to create a product that made a profit.

Since then, Palantir has worked with the government agencies around the world and even played a part in investigating terrorist attacks. Now that Karp has found success in Palantir, he reflects that having money means he doesn't need to make difficult choices.

"The main element of freedom is when I was a poor student in Germany I had to decide what I was going to eat during the day and now I don't have to think about that — having enough money so you don't have to decide, can you go out for pizza or Chinese food," Karp said.

What's more, it gives him more flexibility to be creative, he says. Back in Palantir's early days, the team had to be innovative to keep up with investors' expectations, but Karp calls this a "forced creativity."

"If you just look at the Palantir story, sure it looks like a success story from the beginning but in fact no one believed that data was viable," Karp said. "People didn't believe we should work for the government...no one believed the product would work."

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